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Glossary

Staking

Locking up cryptocurrency you hold on a Proof of Stake network in exchange for rewards, usually paid in the same cryptocurrency.

Staking is the process of locking up (staking) cryptocurrency you own to support the operation of a network based on the Proof of Stake mechanism — in exchange, the participant receives regular rewards, usually in the same cryptocurrency, as a percentage of the funds committed. This can be done on your own (by running your own validator node) or, more commonly among individual investors, through an exchange or wallet that pools funds from many users.

Staking carries the risk of price fluctuations in the staked cryptocurrency, and sometimes a lock-up period during which funds cannot be withdrawn immediately. This sets it apart from simply holding cryptocurrency (HODL), which generates no additional income.

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